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By Michael Blanding

Q: When is a trash can not a trash can?

A: When it’s a Wi-Fi hotspot, air-purity monitor, and advertising billboard—all in one.

Bigbelly solar-powered trash cans have been street corner fixtures in Philadelphia, Boston, New York, and other cities around the world for the past decade—providing a self-compacting solution to keep streets clean. Last year, however, the Massachusetts-based company’s CEO shared plans to change its business model from selling a product—waste and recycling stations—to selling a subscription-based service that could include Wi-Fi access, sensors, and digital advertising.

Harvard Business School professor Mitchell Weiss explores this strategy pivot in a new case on Bigbelly, co-written with case researcher Christine Snively, that looks at the implications for technology companies entering the “smart cities” field.

“I wanted to explore the opportunities and challenges of selling to government in a company that is moving from selling hardware in big chunks to selling software as a service,” says Weiss, the MBA Class of 1961 Senior Lecturer of Business Administration.

Pursuing software as a service (SaaS) opportunities is one that many companies are exploring as they follow the friendly economics that can come from moving away from selling one-off products toward licensing products or services on a subscription basis. Think of what Microsoft is doing in transitioning its Office suite of business applications from standalone software products purchased at the store to something companies or individuals license annually over the Internet.

More recently, companies have started selling “anything as a service” (XaaS, pronounced “Zass”), including server infrastructure, applications, and administrative support, all available via subscription through the cloud.

Getting to SaaS is complicated enough as a strategy transition—Bigbelly’s challenge is even more difficult given that it sells to government customers notorious for labyrinthine procurement processes and glacial sales cycles.

At the same time, Weiss reasons, if approached in the right way, selling to the public sector can amount to a huge opportunity for the right business.

Weiss initially approached Bigbelly looking for a non-technology case about how companies selling to government can expand a business to multiple cities.

“I thought what could be less high-tech than a trash can,” he remembers. When he met with company managers, however, they broke the news that they were transitioning to expand their connected software offering and provide Wi-Fi and other hi-tech services.

“My first thought was, what are you doing to my course?” laughs Weiss. “My second thought was, what are you doing to your company?”

Selling hardware to budget-crunched cities can difficult. Bigbelly’s early pitch was that by providing trash compacting in the units (solar powered to boot), additional waste storage would help keep streets cleaner. Another plus: sensors in the units report when the cans are full, enabling cities to optimize pickup routes and save money.

Even with initial growth, however, the company wondered why it wasn’t selling even more trash products to more customers.

It turns out that the usually universal sales-winning message of “save money” is not always a convincing pitch for cities. “The reality is, 80% of a city’s operating budget is people,” says Weiss. “When you say, ‘save money,’ what they hear is ‘lay off people.’ That doesn’t mean it shouldn’t be done sometimes, but it does make things more difficult.”

A better strategy is selling cities on something citizens need. In Bigbelly’s case, the company aims to leverage the power and connectivity already embedded in the waste stations for a public increasingly hungry for data. Not only are Wi-Fi hotspots in demand by those who can’t afford Internet access, but connectivity is also increasingly desired by smartphone users who want to cut data costs while streaming high-bandwidth content.

“I’ve been surprised at how popular it still is, both to bridge the digital divide and for people who like having access to Wi-Fi instead of using their cellular data,” says Weiss.